So what happens to your 401(k) withdrawals after age 59 1/2 if you move to another state, say for retirement? The withdrawals would have been exempt from state tax in Pennsylvania, but would they be subject to state taxes (aside from states that have no income tax) upon withdrawal when living in another state? Seems like that would be a case of double taxation at the state levels. I am not aware of any other state that taxes 401(k)/403(b)/etc. contributions up front like PA does (NJ does tax regular IRA contributions but not 401(k) contributions).
Conversely, if someone retires to PA, IL, or MS from a high tax state, it seems that would be largely equivalent to moving to a no income tax state (assuming 401(k) distributions make up the bulk of your retirement income), since retirement distributions from qualified tax-deferred retirement plans are not taxed in those states.
